Always assume 100% loss for long?

[a529612]

Is that a good rule of thumb when it comes to position sizing even when you buy ITM options so you'll never bet more than you can afford to lose?

 

[ElectricSavant]

Well also its according to what your target is for the short

 

[Bitstream]

Quote from a529612:

Is that a good rule of thumb when it comes to position sizing even when you buy ITM options so you'll never bet more than you can afford to lose?

yeah, felt obliged to think i might lose the whole premium and more comfy when decidin' to open my pos ans size em properly...mind u i only played hard direction so bot otm stuff.

 

[forex-forex]

Quote from a529612:

Is that a good rule of thumb when it comes to position sizing even when you buy ITM options so you'll never bet more than you can afford to lose?

Yes........after hour trading can wipe you out.

 

[IV_Trader]

Quote from forex-forex:

Yes........after hour trading can wipe you out.

funny that you mentioned it...I had a big overnight position in JBL( ITM puts + long stock). JBL issued a pre-warning and was down 17 in pre market. IB showed a huge loss on stocks , but no gains on puts (till 9:30). If I didn't had enough money on account , would IB close my position ( even if gains on intrinsic value of puts minus loss on stock was 8k and growing with every down tick).Maybe I should call IB and mention this scenario ; can happen in the future on the much larger scale

 

[Bitstream]

gotta luv those huge gappers down, innit...jbl today and josb/pozn few days ago..amazingly easy downtrends right off the gate.

 

[IV_Trader]

Quote from Bitstream:

gotta luv those huge gappers down, innit...jbl today and jobs/pozn few days ago..amazingly easy downtrends right off the gate.

you see B...and you was complaining that reports a dead just a week ago.... Never.

 

[Bitstream]

Quote from IV_Trader:

you see B...and you was complaining that reports a dead just a week ago.... Never.

yeah, hee hee, this is a freakin' paradise for us report traders, eatin' my words big time.

 

[IV_Trader]

Quote from Bitstream:

yeah, hee hee, this is a freakin' paradise for us report traders, eatin' my words big time.

 

[taowave]

Quote from a529612:

Is that a good rule of thumb when it comes to position sizing even when you buy ITM options so you'll never bet more than you can afford to lose?

It certainly is the most conservative,thats for sure.But why would you approach it so radically different than you would a stock??

Why not size it as a percent of equity and equate a stop value relative to $ value of an ATR stop on the underlying equity??

You will need to make an adjustment for delta and vega risk